T-Mobile launches mobile Internet

Deutsche Telekom unit compares experience to using PC

By

KabirChibber

LONDON (MarketWatch) -- Deutsche Telekom AG's mobile phone service provider T-Mobile said Wednesday it will launch a new open mobile Internet service, dubbed web'n'walk, in Germany from July and the U.K. and the Netherlands by the end of the year.

T-Mobile said the service will allow users of its mobile phones to surf the Internet as easily as on a personal computer, with no restriction on the type of sites that can be accessed.

Most current mobile Internet services, such as WAP, only allow customers to use certain web sites of limited size and complexity, and are very slow to load.

"We are paving the way to free Internet for our mobile customers, demonstrating once again that we are the innovation leader in the mobile communications market," said Rene Obermann, chairman and chief executive officer of T-Mobile International.

"The click and page load ability (of web'n'walk) will be comparable to home use," Obermann added in the conference call.

Obermann said T-Mobile had not decided on whether it will roll out web'n'walk in the U.S. He said a lack of a 3G next-generation telecoms network in America is part of the reason why it will not launch there yet, but not the only one.

Targets, packages

"Our target is to attract several hundreds of thousands of new web'n'walk customers by the end of 2006," Obermann said, adding he expects average revenue per user to "climb significantly" for customers using the open mobile Internet.

Chief Marketing Officer Ulli Gritzuhn said on the conference call that it targets additional monthly revenue of 10 euros per customer from web'n'walk.

Also, Obermann said that T-Mobile will achieve, and is likely to exceed, its goal of 500 million euros in savings in 2005.

Web'n'walk will be available on the four mobile phones, including the 6680 from Nokia Corp.
NOK, -0.70%
and the T-Mobile Sidekick II, which offers e-mail push capability. "We expect all data-enabled cell phones from T-Mobile to be web'n'walk devices in five years' time," Gritzuhn said.

"In the future, T-Mobile and Google Inc. will cooperate closely on the new web'n'walk offers," the service provider said. Obermann would not comment on the financial terms of the arrangement between T-Mobile and Google.

To entice customers, T-Mobile will launch web'n'walk with its new the Data 30 option, which allows users to download up to 30 megabytes, for 10 euros a month. Gritzuhn said this allows around 500 minutes of surfing the Internet or around 30,000 e-mails.

He also noted that T-Mobile Sidekick users in the U.S. only use an average of 14 megabytes a month on mobile Internet services currently available.

Concerns on European growth

On May 12, Deutsche Telekom said net profit for the first quarter rose 59.8% to 1 billion euros, boosted by strong growth in its U.S. mobile operations and broadly in line with market expectations. Net revenue increased to 14.4 billion euros from 13.9 billion euros.

T-Mobile's earnings before interest, tax, depreciation and amortization for the quarter rose 15.1% to 2.1 billion euros, with revenue up 7.6% to 6.75 billion euros.

In the U.S., T-Mobile revenue jumped 26.5% to 2.6 billion euros from the same quarter in 2004. But in Germany, revenue fell 2.2% to 2.07 billion euros, with only 89,000 new customers, while revenue in the U.K. plunged 12.8% to 988 million euros.

The falls in revenue and new customers in Europe follow Deutsche Telekom's decision last year to cut back on prepay handset subsidies for mobile phones.

Last Thursday, Merrill Lynch cut Deustche Telekom to neutral from buy on its long-run margin assumptions about the U.K. and German wireless operations. The broker told clients that in Germany T-Mobile growth has stalled due to falling net subscriber additions and a deterioration in customer quality as T-Mobile focused on margins.

Merrill said it doesn't believe a return to growth is likely this year. "In addition, in the U.K., we think results have deteriorated to the extent that an organic solution is unlikely to suffice," the broker concluded.

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